CSX stock price target lowered to $38 by TD Cowen on Berkshire decision

Investing.com - TD Cowen has reduced its price target on CSX (NASDAQ:CSX) to $38.00 from $45.00 while maintaining a Buy rating on the railroad operator’s stock. The stock, currently trading at $32.19 with a market capitalization of $60.1 billion, has experienced a notable 10% decline over the past week.

The adjustment follows indications that Berkshire Hathaway does not intend to purchase CSX, contrary to TD Cowen’s previous expectations that such an acquisition was likely given the competitive offering of an East/West combination.

According to TD Cowen, the valuation and merger benefits were "clearly not appetizing to Berkshire," leading the firm to revise its outlook on potential consolidation scenarios in the railroad industry.

The research firm now believes that Burlington Northern Santa Fe (BNSF), which is owned by Berkshire Hathaway, may only acquire CSX if "backed into a corner" following potential approval of a Union Pacific/Norfolk Southern deal and disappointing cooperative agreement outcomes.

TD Cowen stated it has adjusted its valuation framework for CSX, resulting in the $7 reduction in price target while maintaining its positive long-term view on the stock with the Buy rating.

In other recent news, CSX Corporation has been in the spotlight with several noteworthy developments. Activist investor Ancora Holdings Group has urged CSX’s board to explore merger options, following the recent combination of Union Pacific and Norfolk Southern. Ancora criticized CSX’s CEO for operational issues and suggested hiring an investment bank for merger exploration. In a related move, Toms Capital Investment Management has acquired a significant stake in CSX and is seeking a meeting with the board, potentially to discuss merger possibilities.

Additionally, CSX, in collaboration with BNSF, has launched new intermodal services aimed at enhancing coast-to-coast shipping solutions across the United States. These services include routes connecting Southern California with Charlotte, North Carolina, and Jacksonville, Florida, as well as Phoenix, Arizona, with Atlanta, Georgia. Meanwhile, BMO Capital has downgraded CSX’s stock rating from Outperform to Market Perform, citing uncertainty surrounding potential rail mergers that could affect the sector’s outlook.

In another development, Warren Buffett of Berkshire Hathaway has denied any interest in acquiring railroad companies, including CSX, putting to rest recent acquisition rumors. These events collectively highlight the dynamic environment surrounding CSX Corporation as it navigates industry changes and investor pressures.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.